 Felly, wrth gwrs, wrth gwrdd, mae'n dweud i'r 19th gynnwys ddiwrnodd gyfnodau yn Comunitys Cymru yn 2019. Fe'n rhaid i fynd i'r llwyth i'w gwirioneddol i'r phoenol oherwydd hynny. Eitem agennedol yng nghymru oedd i'r ddweud i'r ddweud i'r ddweud i'r ddweud i'r ddweud i 4 o 5 o'r prif. Roeddwn ni wedi'n llwyth? Roeddwn ni wedi'n llwyth. The Committee will hold its fourth evidence session on the Non-Domestic Rate Scotland Bill. Today's session will be split into two panels. For today's first panel, I would like to welcome Rachel Blair, Public Affairs and Communications Officer Scotland Charity Retail Association. Stuart McKinnon, External Affairs Manager for Scotland licensing by this umm— said me on small businesses. David Lawnstayle, director of Scottish Retail Consortium and Mark Strithawl chief executive Scottish Tourism Alliance. I have to kick off the questioning by asking whether the findings of the Barley review group, in the subsequent draft bill, represents a fair approach to non-domestic rates that will better support economic growth. I must hold up her hand, if you like, on the vanguard of campaigning for review of business rates and we strongly supported obviously the work done by Ken Barkley and his group. We didn't necessarily get everything out of that that we would have liked but I thought I think there's a lot of measures that came out of the both the Barkley report but also in this bill that we can get behind in support. So obviously more regular revaluations that's a big thumbs up from us on that agenda and I can go into that in more detail as to why. We also support the effort to reduce the period between which valuations are undertaken and come into effect, so that's been condensed from two years to one year. There's more on this business rates agenda that's not necessarily legislative that we'd like to see undertaken at our point maybe to two aspects. One is the large business rates supplement. Ken Barkley's report actually alights on this it says that that should be parity with England should be restored by April of next year hopefully that's something the committee can can broach with Mr Barkley when you speak to him later on and the other issue this are pretty fundamental issue I guess for us and for our members and they count for about a fifth of the business rates paid in Scotland is the whole issue about the poundage rate and how onerous it is at the moment so the poundage rate for example is at a 20 year high and that's you know it's accelerated quite markedly since the start of this decade and that's a big issue for us so those are lots of positives in this bill but there's more stills to be done. Thank you anybody else for something to look at? Yeah absolutely so you know David's taking credit for the Barkley review I'll do the same you know the first minister announced the review of business rates at the FSB's conference a number of years ago and we were closely involved in the Barkley review and fairly early on it emerged that the bill was going to be focused sorry the review was going to be focused on modernising the current system rather than fundamentally rethinking the business rates system and as a review aimed at doing that we applaud many of its recommendations. Now since Barkley reported you know there's been work to try and put his recommendations into practice and this legislation is one part of a jigsaw of measures which we broadly support. The switch to a more frequent revaluation cycle should ensure that rateable values better reflect prevalent local market conditions the you know and further other bits and pieces in the bill we broadly support. What we would like to see the Barkley review and the focus on business rates as a consequence of the Barkley review do is to deliver a step change in the user friendliness of the business rate system. I'm sure many MSPs at the last revaluation had correspondence from local business owners who didn't have a good understanding of the rate system and the revaluation process. What we would like to see is a real effort to get every part of the business rate system working together to deliver a more user friendly system and this legislation is a part but only a small part of delivering that. I'm here from the Charity Retail Association. There are over 900 charity shops in Scotland and we represent 85 per cent of them. Overall we are supportive of the objectives of the bill and the Barkley review to simplify the system for ratepayers. We were pleased that the Barkley review concluded to keep the mandatory 80 per cent charitable relief for charity shops and what we'd like to see is the significance of this is to be protected. We'd hope that local authorities or in this bill there would be a consideration to up this mandatory relief to 100 per cent. The important thing to us is that the health of the high street is a key consideration in this bill for charity shops. We believe that charity shops increase footfall to high streets and they also help to fill vacant units. We have case studies, particularly in market in England, where during the recession we saw a lot of empty units and a decline of the high street. Charity shops filled the vacant units and that allowed them to increase the footfall. Now, market is quite a successful seaside destination. Overall it's important that the bill considers the importance of the charity retail sector. Again, thank you very much for inviting me along today. From the Scottish Tourism Alliance again we welcome being part of this process. We've been very active with our colleagues from UK Hospitality and the Scottish Licence Trade Association in representing the views and the concerns of the industry. Despite the volumes of visitors that we're enjoying has brought with it many challenges and we're seeing specific declines and incremental costs to business and that poses a big threat to many. We were particularly grateful for the fact that the finance secretary afforded a 12.5 per cent real-term cap on the rates last valuation as it was and has extended again but for many that cap has actually now become null and void due to the state aid caps etc. As others have said we very much welcome the review of the frequency of valuation and I think in particular with the fluctuation of business trends and trade as it has been and the Aberdeen example was a specific an obvious one to point to with the with the oil index impacts on tourism business as well. We have an issue I suppose a challenge for us in the sector in terms of the methodology of calculation of the current rate system and again colleagues within the SLTA and UKH and ourselves have been having a dialogue with others to at the I suppose the response from Ken Barclay to bring forward a proposal that may be more satisfactory and fair to the future. We're very supportive in principle again that it will sort of encourage that investment and entrepreneurship state place and the industry needs to innovate and it needs to allow that flexibility to do it so I suppose I can talk more about other issues or other concerns in a minute but in the in summary with as with others I think it's a good step forward but there's probably still more to do and discuss. Okay can I ask the there was two recommendations that Scottish Government rejected from the Barclay review can can I ask do you have any particular views on them that's obviously recommendation 28 that all property should be entered in the valuation role and current exemptions should be replaced by 100% relief and that large-scale commercial processing on agricultural land should pay the same level of rates as similar activity elsewhere so as to ensure fairness is that anything that you would have particular opinion on? There was a sorry if I picked up the start of your question convener there was another aspect that Ken Barclay recommended that the Scottish Government rejected which was the idea of introducing some sort of out-of-town rates levy and allowing councils to actually introduce that and thankfully the finance secretary wisely came to the view that that wasn't an idea that would be taken forward and I would certainly commend him for that I can happily go into some of the detail of that but that would have in a nutshell added fresh complexity and cost if you like to the rate system and thankfully hasn't progressed that. In relation to the point about all properties being on the on the valuation role I can understand the sort of the the purest argument that all properties should be on the role so we understand where where tax is lost where where where people are getting help but on the other hand having been in discussions with assessors and with government I know just how slow and creaking the current system is so to put additional pressure on the assessors at this time that we're looking to move to a more frequent revaluation may not be sensible and I suppose the priority for us would be to get this new revaluation cycle working more quickly over over other other concerns. We were at the committee was on a visit on Monday to Kilmarnock and Newmills and I want to put in the record of thanks to everybody who helped to organise that it was a very successful visit we learned a lot from it but one of the things that came up was the sort of cliff edge scenario with the small business bonus we're talking to one company in particular that was talking about he doesn't want to grow his business in the town centre because if he did go to a larger premise he would lose the small business bonus and it would end up costing him too much so his options were to stay small or to leave the town centre. Does anybody have any suggestions on how that can be overcome? Maybe I can kick off on that one. The upcoming review of the small business bonus will be a great opportunity to kick around ideas about approving the current scheme and we're hoping the review will come up with real recommendations about the best way to support smaller businesses in the rate system. I think that at the last Scottish Government budget we made representations to the finance secretary for an additional taper between bands. Of course successive finance secretaries have made changes to the small business bonus where there is a multiple property band introduced by John Swinney when he was finance secretary, which was aimed at tackling that particular problem. As part of the Barclay review, we did make a recommendation that smaller businesses should be allowed to keep their relief as they grew. If they did take on your second premises perhaps you would pay rates on that second premises but retain your relief for the first to try to soften the edges of that. At the same time, we recognise that we can't necessarily ask for the moon on the stick and we have to work within certain parameters. I would say that trying to chew over those pretty complex issues about finding an optimum way of supporting small businesses will be really important as the bonus review continues. I'll just move on and I'm sure you can go back to that. We have got quite a lot to go through so if we can just keep things as concise as possible that would be good. Alec, can I just quickly go back to something that we said earlier? It was about the user friendliness of the system. I mean, what on your view needs to happen there, Amy? I assume that that's not legislation? Is it a resource thing? Is it a change in culture within those services? What is it? I would say all of the above. I've worked for the FSB for a number of years and what was remarkable was the similarity between the last revaluation and the one before it, where lots and lots of businesses were caught unaware. There were issues about data collection from the assessors. There was a political reaction at that point. I think that an awful lot of those problems could be countered if we delivered a significant improvement in customer service. One of the more difficult things about the rate system is that there are lots and lots of bits of public bodies involved in it. You've got all 32 local authorities, you've got the Scottish Government, you've got the assessors who are all semi-autonomous. An individual business owner should not need to know all of that and to interact with the system. What we propose is a digital interface for 99 per cent of the cases. Where businesses can submit rental data, they can pay their bill, they can apply for reliefs. Basically, to make it as as simple to interact with the rate system as it is to pay a utility bill online. For that to happen, you'll need multi-organisational co-operation, and that's where the sticking point can be, because lots of organisations have multiple priorities. You might not need legislation, but it would be if there are bodies which are not playing ball, legislation might be a last resort on that front. Briefly, then, Ali, I don't want to get stuck on the one point. I noticed in your evidence, Mr McKinnon, that you described the admin system in Scotland as old-fashioned. You suggested that it wasn't old-fashioned elsewhere in the UK. From a committee's point of view, we're looking for ideas of how things could be improved in this bill. The evidence from the assessors highlighted that they welcome a change in the legislation that would allow them to communicate with ratepayers digitally, because at present they feel like they have to use paper-based correspondence methods. That simple switch should help us to move slowly into the 21st century. Similarly, what we see in Northern Ireland is the development of a digital spatial portal for all property and land-based services. That looks like an excellent model. That wouldn't necessarily need legislation to develop that, but if there are legislative barriers to that sort of model being developed in Scotland, that would be the opportunity to address those particular problems. Certainly, my experience of trying to represent and support businesses at the last evaluation was exactly as you described. I found it very difficult to get information and to get stuff to understand. At that point in time, it seemed that hospitality, in particular pubs restaurants, seemed to be disproportionately impacted. That's certainly how it felt in terms of the numbers of businesses that were going out of business. Was that the case? Is there certain industries that are disproportionately impacted by the current system rates? Is there something that can be done about that? From the sector as a whole, when we were obviously aware of the valuations coming around, the level of shift to the increased valuation was so significant unless there was an intervention, as has been, many of them would have been seriously at risk of putting the key away. And there are those who still sit with that concern because of the current valuation levels that are set on the book. I think that picking up on what Stuart said around the simplicity of being able to report data—I think that the assessors were fair enough in saying that there's not enough data being presented back the other way for them to do their job was what was taken on board and has been taken on board—but going back to just the simple examples of getting the rate relief on the cap across the 32 local authorities, there was absolute inconsistency in that process too. Some local authorities were absolutely well-equipped to act quickly and there were others that said that they just didn't have the software to be able to actually conduct the transactions or the adjustments, as you would want. So all of that costs money to a business and all of that puts at risk of that business staying alive. If I may, and I think for our sector, one of the great frustrations, if you like, about the previous revaluation period is that previously the valuations were undertaken at spring 2008, which was in a sense the top of the market before we then had the financial crash and a lot of the sort of travails within the retail industry have been well known over recent years, so I think it sort of underpins the need for more regular revaluations to be honest. That's not going to solve every problem I've already said, business rates, the poundage rate and tax rates are too high, but I do think more regular revaluations have actually smoothed out a lot of the problems because basically you had a sort of seven or eight-year period there where valuations were taken at one level and then when bills landed on the doormat it's very understandable that some companies would have seen, some organisations in some sectors would have seen quite a change in their sector's performance and obviously Mark can speak for the hospitality sector, some elements of that were, if you like, hot during that period and did well and therefore there would have been differentials whereas for retail towards the end of that period actually it was quite challenging as well. Can I pick up on the point that you made earlier about the out-of-town retail centres? Is there a balance at present between out-of-town? It would seem that there are many retailers in town centres that argue that out-of-town have a lot of advantages, car parking etc. Is the system fair as it is or should there be another look at out-of-town? We're always open to that. I think that town centres have a tremendous amount to offer but like businesses and sectors they need to reinvent themselves, they particularly need a sort of compelling reason for people to go and visit and spend time and spend money. I think all retail destinations have been struggling of late, all have been seeding ground if you like to see online retail space. I was reading figures the other day that almost nine out of ten people in this country have shopped online to some extent over the last year or so and that's much more prevalent in this country than it is in many places, for example in the rest of Europe. We're just more advanced in a sense. We've bought into the idea of online retailing in a bigger way but that actually reads across a whole range of other sectors, it's not just retailing so buying holidays. I'm probably not the only person who's bought holidays online in recent times and we see that as well in banking financial services, we see it in terms of newspapers and media, estate agency and things like that. The digital revolution is touching every single sector and I think that's one of the strengths of the bill is that having more regular re-evaluations means that the rating system if you like keeps up with changes not just in terms of individual sectors and how they're performing but also changes as well in the economy structurally. Given the town centres in particular are really struggling, you know, you just need to walk round most areas of Scotland, is there more that this bill could have done to support town centres? If so, what? So again, I think this goes back to my earlier point, so the bill is positive as far as we're concerned in many respects but there's actually non-legislative action that is also required so there's lots being done in terms of trying to get people to live in town centres in terms of public realm investments, the finance secretary made an announcement about a town centre fund. All these things, you know, are worthy, have a lot of merit, are positive but at the end of the day if it is too expensive for retailers and other businesses to invest in town centres and the poundage rates at 20-year high, the large business rates supplement is double what it is south of the border. If it's too costly to invest in a town centre, then you have a problem. So I think there's a coherence here. The bill, an issue with coherence, the bill is just one aspect of it, you know, we think there's a lot of merit in it but there are other things that government can do and that's not just the Scottish government but also at a local government level. So councils for example for the past three and a half years have had the power to reduce business rates. I'm only conscious of three out of the 32 local authorities doing anything on that front. If I could come in on a couple of these points, just to return to the hospitality sector, you know, the rating of the hospitality sector has been a fairly persistent and controversial issue. What I would suggest is that because it's been such a persistent problem, is there an opportunity for Parliament to scrutinise the role of the assessors? Parliament's historically been reluctant and is this bill an opportunity to, ahead of the next revaluation, at the very least get the assessors into evidence how they're coming up with rating methodology ahead of a revaluation. If I can talk about town centres and high streets, briefly, you know, FSB's long has been a champion of town centres and high streets. And at the moment in a lot of town centres and high streets it feels like independent businesses are fighting the battle by themselves and we've seen a large number of public sector bodies and large businesses leave our high streets, the banks being a prime example. If we want those places to be successful, we need to get a wide range of organisations back into our town centres and high streets. Getting the right rates package is one element, but it's only one part of a wider mix of policies. Again, I'm certain that the upcoming Small Business Bonus Review will look at place-based issues and that some of the—it might not necessarily need to be attached to this bill—it might be able to be looked at elsewhere. I think that it's—as we consider—it's just over five years since the town centre action plan and review, and it would be—again, it's time to revisit high street policies and what rates is only one part of it. So is the panel generally in support of through the Small Business Bonus Scheme and the review you'll be contributing to? I mean, I think just echoing what Stuart and David had said. I mean, from a tourism point of view, a tourist comes to visit to experience place. We're in the process of starting to shape our future tourism strategy for Scotland beyond 2020, and all of the traveller trend is saying that they want to absorb and consume, and we've seen the change in behaviour through how people choose to stay and experience destinations. You look at the failures of some of the major restaurant chains, Jamie Oliver's, and all of these other operators who've fallen off the high street who were offering an alternative, but then you've got a lot of independent restaurateurs and real creative talent in Scotland that are actually now seriously questioning whether or not they're able to afford to operate in these destinations because of the rate structure as is, and I think for everything that's been discussed so far around the frequency of revaluation and allowing those businesses to flex, but equally we have out-of-time experiences as well in many of these destinations too, which draws and attracts the tourists to visit. But I think we have asked on several occasions to the Scottish Government as well to really get a grip of what the assessors are actually doing in terms of the methodology and the evaluation process, and some of the challenge back is through lack of data, but there needs to be a much clearer understanding for the industry as much as the assessors and government to get the right system that works for the sector on a regular and more frequent basis to really prompt investment, you know, because not being able to plan ahead is clearly something that wouldn't incite that encourage that investment. And I'm just going to finish on this, but just sorry, just just okay. Yeah, I'd just like to add that in terms of long-term planning, the rates relief system that charity shops currently get of 80% does sort of leave an uncertainty in some sense. There's a postcode lottery in the application of the discretionary relief. Only a third of local authorities in Scotland grant the full 20%. And our members tell us that the removal of this 20% or where it doesn't exist, this can result in lower performing shops closing, for instance in rural areas or in disadvantaged communities. So what we're looking for is a system where there's more consistency across the local authorities that would allow for charity shops to invest in high streets. As it is, this can be quite difficult. Okay, and just to finish on this, convener, but I mean, I just think it's interesting that certainly my experience in trying to deal with assessors was one of, they were certainly not helpful to put it mildly. And there seems to be that concern that's coming through. I think that's important that we note that in terms of our report, that you do think that's an area that without even legislation something needs to be done. Thanks very much because you've clearly made your views there already on Andy. I mean, a key part of the bill is the move from five to three year revaluations, which I think you've all said, Richard, I don't think you've said anything on this, but the others have said that it's helpful. Can you just say briefly why you think that that's helpful, particularly in the context that any revaluation is only as good as the data upon which the value is based? Therefore, if there continue to be issues about the capturing of data and accurate data, is a three year revaluation going to be any help? Certainly, from our perspective, it's alluded to earlier and is also in our evidence where we strongly support more regular revaluations. There are a number of benefits that accrue from that. Also in the bill, there's a provision in there about extending the period of time that ratepayers have to, if you like, provide information to assess. There's, I think, the dates or something like going from 14 days up to 56 or something like that. First, I think that that should help, because I suspect that one of the challenges for ratepayers is when they've only got a couple of weeks of window to provide information, then it's a case of we're just trying to appeal. If they've got more time to consider what information is required, I think that's a positive. Theoretically, more regular revaluations should mean that over a relatively shorter period of time ratepayers will come up to speed and make sure that their valuations are in line with, or at least the information they're providing. There's more of an incentive, if you like, to make sure that they're providing the information, because they're going to be revalued on a more regular basis. Similar to what David said, there will be a challenge if the current system is not working very well, and we've got a five-yearly revaluation. A three-yearly revaluation model means that we really need to sharpen up our act, and that's one of the reasons that we support the switch, that it will mean that ratepayers become more familiar. It should mean that it necessitates both the assessors and local authorities to look at how they deal with the revaluation process, and those measures in themselves would be helpful to make the system a little bit more user-friendly. I think that when we look at the change of what's happening around us, being able to flex as need be in what is a relatively short period of time, I use the example of digital, which we, in 2012, when the current tourism strategy was written, the word digital only featured in it three times, and here we are, even at 2016, it was the number one issue for all of us. I also think that there's less chance that the jump or change between rate evaluation will be as significant as it has been or potentially could be over a longer period, so we certainly support it. We are broadly supportive of a change from five to three years, but we would ask that the relief could be confirmed within that three-year period, because at the moment the relief is confirmed on a yearly basis, and again, this makes long-term planning difficult for our members. We'd also want to ensure that it was carefully considered so it's not an unnecessary burden to smaller charities in particular, and because of that, we are broadly supportive of a digital interface that should hopefully make the communications better, which our members have also told us that communications can be quite poor around revaluation times. The final thing that we would ask is that the revaluation times could perhaps be aligned with the other revaluation times in the UK, which would help a lot of our members. We are moving on to some of the evidence that Stuart McKinnon gave to the Federation of Small Businesses. The third page of your second page, rather, you said that, if SP is concerned regarding the decision to introduce a number of changes to the proposed legislation at stage 2 reducing the opportunity for scrutiny, what do you mean by that? We haven't got to stage 2. I understand that there are going to be moves to detail the changes—the Government is going to detail changes to the appeal system at stage 2, as it enters the Parliament. The details of those changes to the appeal system will be important to ratepayers to understand how that will work. I understand that as part of being part of the Barclay review group. You have advanced sight of intended Government amendments. I have no advanced sight, but I understand that that is the intention. Okay, that is interesting. You have already touched on this. The FSB has long argued that the Scottish Parliament should have a role in scrutinising the activity of the assessors. Of course, the assessors have always been independent because they are making professional judgments on valuation. However, you mentioned the methodology of valuation. I think that you mentioned Stuart in particular in the hospitality sector and, of course, different types of property have different valuation methods. What are you really suggesting there? Are you saying that, for example, the methodology used to value hospitality premises should be subject to parliamentary scrutiny? All those practice notes should, in effect, be in secondary legislation? At the very start, I suppose, ahead of a revaluation, it might be useful to get the Scottish Assessors Association above or ahead of this committee or another committee and say, what preparation are you making ahead of the next revaluation? What consultation have you had with key industries about your methodology? At this stage, I presume that the assessor would still be independent to make up the methodology, but there should be a role for Parliament to ask how they are preparing for the revaluation. Are they accountable not to Parliament but to local authorities who own the joint valuation boards? Are they sure that scrutiny is better done at local council level? Having entered into discussion with local authorities about their relationship with the assessors and with local councillors, that particular relationship is not well understood and is not well understood consistently across the country. Okay, fair enough. Sorry, Andy, but you say that it is not well understood. Andy, reading of it is that it is local authorities that are in charge of them. What is your understanding? I think that it is local authorities, but individual councillors and officials in local authorities do not often have a good understanding of the role of the assessor. Can I just say, convener, on 5, that when the revaluation of appeals was on-going, the assessor repeatedly told me that they were not accountable to the council that they were an entity within themselves? I think that that is something that we need to look at. Also on your evidence, Mr McKinney and the holiday homes, you say that FSB broadly supports measures to address the misapplication of the small business bonus scheme, especially when applied to non-business recipients. Given that the small business bonus scheme is not really about businesses, it is about small, non-domestic-rated property and some of those properties are not businesses. They are in the public sector, bowling clubs or whatever. Are you actually saying that if there is no commercial activity operating from a non-domestic property, it should not be eligible for a small business bonus scheme? We are broadly supportive of the specific move in the proposed legislation to end as they describe it as a loophole for holiday homes, where holiday homes or second homes are applying for the small business bonus. From our point of view, that is a misapplication of the relief. Some people have highlighted that MSP offices are applicable for the small business bonus. Given the name, I am not sure that that would necessarily be the right application for the relief. I think that this sort of issue will be looked at during the small business bonus review, but we are broadly supportive of the move to only apply the small business bonus for premises where small businesses are being run. MSPs offices are just offices as far as the rating system is concerned, and it does not matter who occupies them. Just a couple of further questions for the retail consortium. You say that you are firmly opposed to repatriating control over the poundage to local authorities. Given that this is a local tax, should they not have control over the rate? What is the problem? You have read our submission correctly, and we are opposed to it for no other reason than that we fear that rate payers would be treated as a cash cow. We are conscious at the end of the day that council tax bills are just going up by 3 to 5 per cent, well in excess of inflation. As I put in our submission, the poundage rate, the tax rate, has gone from basically 41 per cent to 49 per cent since the start of this decade. It is about to go up even further, a 20-year high. I am not necessarily convinced that local authorities would do a better job, if you like, of keeping down the poundage rate. I suppose that we would be more amenable if councils had actually picked up on the local discretionary rate relief that I talked about earlier on over the past three years and actually used it as well. I have not put your finger on the key thing there. It is that they have the power to reduce rates and indeed many things probably would like to stimulate some business, but they also need the opportunity possibly to increase them as well. In other words, they need the full flexibility in any tax system. We have supported flexibilities in the rate system in terms of the business rates incentivisation scheme, in terms of the business improvement districts and the level that they are able to charge as well. As I said, we supported the local discretionary rate relief, but hardly any councils have bothered their shirt to use it. If they were to make a convincing case that they would be able to keep down business rates, they would be on a firmer footing when it came to trying to convince the business community that they should have the responsibilities. As I said, none of them have used or very few of them have used their power to keep down business rates and are not entirely convinced that they would endeavour to do so. Issues concerning procedural matters. A moment ago, I cannot remember which panel member referred to the time period in which the information notice is to be required to be returned. I do not know if it was Mr Lonsdale. It has gone from 14 days to a proposal of 56 days plus than the 28-day appeal, but we have heard evidence to the effect that people think that that is too long and that it should be an initial period of 28 days. What would your views on that be? I have not followed the rationale for the 28 days. As I understand it, in the 56 days or wherever the figure was, it was in the Barclay review. It obviously studied that for 18 months or whatever, and then that has been accepted by Scottish ministers. I would like to think on that basis, and there has been some consideration and thought into it. I am not sure who made the 28-day proposal and why they were advocating that, so it is difficult to comment. It would be in the evidence received by the committee, but I guess that it would be because people feel that that would allow the process to be accelerated in a reasonable manner in that, for most, providing the information that is required would not necessarily need to take 56 days, and the whole process could be speeded up a bit. It was in all people's interests to perhaps have a shorter deadline for providing the information notice. It was information required by the information notice. That is the rationale. Clearly, our balance has to be struck, so giving people sufficient time to respond, but also making sure that it is done in a quick and expedited way. I guess that one of the practicalities that I would throw out there is that, certainly for retail is one of those industries where, if you have a good idea and a good proposition, you can scale it up. If you have physical premises, you are often in a number of different council areas or, indeed, operate on a pan GB or a pan UK basis. You probably have lots of local authorities to deal with on a whole range of issues. One of the challenges that has come up through the structural change in how we shop over recent years, but also the cost side of the equation, is that there are relatively few people within retailers of scale who are there to deal with some of those issues. I fully appreciate that there is a balance to be struck, but giving them more time, as the bill does, to respond to requests, is eminently sensible. Anybody else will have a view on the matter? I agree with that. More time for our members to respond to information requests is something that would help them to provide what they need to. The same. I think that there is a huge amount of pressure on a small business owner and operator at the moment in the bulk of our sector, which falls into that category. Whilst an expedient resolution or conclusion is always in the best interest, I think that the ask of many at the moment is to try and do a lot more. As we well know, that many more of the independent owner-operators are very much now at the sharp end of having to run a business because of the labour challenges that we are faced with as well. The balance is the right approach. If it does afford a little more time, I think that that would probably be welcomed. However, I would like to think that the business owner would probably look to conclude sooner than the deadline time. As other people have said, there is a careful balance to be struck. What the policy intention is to get more data returned, and probably the most important thing is for a step change in the user-friendlyness of the system. Rather than when does this paper need to get returned? Can I return it online? Can I correspond with the assessor digitally? Rather than a deadline about when this bit of paper needs to be returned, that is the more important thing. In terms of the recipient of the information notice, I understand that the intention at the moment is to widen this out so that the assessor could seek further information to the information requests from any other person who the assessor thinks has information. Do you have any views on that? Is that up to be welcomed or resisted? I will go first. That thing is broadly to be supported. Specifically, where I see this working well is better information sharing between the public sector. You stick an extension on your garage or whatever, and the information is automatically shared with the assessor between the local authority. That does not necessarily happen as a matter at present. Similarly, in an ideal situation, it would be excellent to see information sharing between tax authorities and between HMRC and the assessor so that businesses are not submitting the same data to the same tax authorities. I also understand that this will give powers for the assessors to get additional data from people like landlords, rather than going necessarily to the tenant. That is also to be welcomed again if it increases the amount of data and the quality of the data. The only thing is that you do not want to put undue burdens on businesses and, hopefully, a sensible approach can be struck. With regard to an issue that was raised a few weeks ago on legal privilege, there was a concern raised by some that, although it is not by any means clear that that is the intention of the bill as drafted, that that could be widened, has that been brought to your attention thus far? The normal understanding of legal privilege is that it extends only to communications with your solicitor and it would not then cover any suggested part of a lease document that was deemed to be confidential. It would just simply be the normal meaning of legal privilege. Has this been an issue that has caused you any consideration thus far? It was raised just by the buy a couple of weeks ago and I thought that it was quite an interesting issue. It is an interesting point that I have not considered at this stage. You might want to refer back to the evidence because I suspect that if it is not to be understood in its normal context, your members might have some thoughts on that. On the consequences of not providing information, at the moment, first of all, the criminal penalty has been removed and has been interesting to your thoughts on that. Secondly, because some people feel that it should be put back and because there has to be a sufficient imperative to provide the information fully and expeditiously. In terms of the level of civil penalties, again, the view has been expressed that, for some of the people involved, that would simply be pocket money, it would be nothing, so there would be no imperative for the large players to pay any heed to that because the civil penalty attaching is de minimis. Any fusing that? I would say that, in terms of charity retail, any fees or penalties would not be welcome in the sector. We would be concerned that that would be taken funds away from key charitable causes. On to fees a minute about the penalties, this would be if there was a failure to comply with the information notice. Yes, I would say that any penalty then, what would be the imperative to comply? For penalties, I mean to look into this further and report back to the committee, but I would be under the impression that charities would be inclined to follow the guidance as it is and ensure that the penalties weren't something they would face, that it would not have any fees for, that would take away from charitable funds, would not be something that is for. A criminal penalty, so what they are doing is replacing a criminal penalty with. Going back to what Stuart was saying about having a system that is simplistic to enable businesses to contribute and input their information, is probably ultimately the number one biggest opportunity to change culture. Arguably, the recent revaluation and the challenges that we are faced with is possibly because some businesses have found it difficult to communicate, respond etc. I think that there is a recognition as well that the data that is currently being gathered is limited and therefore valuations are being based on a small sample set. Having a culture of acceptance that everybody contributes and there is access to information out there, but through a portal that allows it that it's simplistic, it's governed, it's protected, then absolutely and why shouldn't there be a penalty for folk who choose not to comply? What that should be, I don't know, but certainly from the conversations that I've had, there needs to be a fair approach taken and therefore to enable that to happen, then there should be a level playing field. A more frequent revaluation cycle necessitates more data being gathered by the assessors. The discussions that I've had about that, you need some sticks for more data, you need some carrots for more data, of course the business groups are going to go give us the carrots, make the system easy to use and you'll get better, communicate more effectively with the business community and you'll get better data, you'll get more people returning it. Really, we would like to see these fees and fines used as a last resort. For a business, you can understand that at the moment when a business gets a form from the assessor who they've not heard from for seven years, or they might only be in operation for four, that they don't understand what this form is and its significance. If we can really improve the communications between the business communities and the rates authorities, we can get that improvement in data collection without, hopefully, resorting to widespread finding of the business community. In the financial memorandum for the bill, I was slightly concerned with some of the figures that were highlighted in the financial memo where they suggested that they tried to estimate the amount of revenue from fees and fines and they did that on current non-provision of data rates. We would hope that the provision of data rates improved dramatically before we started handing out fines. Obviously, the legislation has to set the level somewhere and the point has been made that if you have a business with a turnover of millions of pounds to set the maximum penalty at either £500 if not on the roll or it's around £7,500, that's just a drop in the ocean. What is the stick there to the large player to get on with it and provide the information? One of my colleagues will get on to anti-voidance issues in due course, but those are issues that we have to wrestle with as we look at our report. There's a strong argument for any fees and fines to be proportionate with the smaller businesses paying a smaller share of their rateable value than their larger counterparts. I'm sure that David will not agree with me on that particular front. Being proportionate is a good basis. I'm not sure why turnover suddenly comes into the mix, why not profits or some other metric. I'm not sure what the relationship is between the point that you make and turnover. The point that I was trying to make, Ms Lawrence, was simply that if you have separated out your small business from your multi-million-pound business, a penalty of £500 potentially or £7,000 is really who cares. It doesn't matter, does it? So it's no incentive to provide all the information that's been required. This is important as we go on to anti-voidance issues, but I'll leave that for a colleague. One last area of questioning, convener. I want to go, Rachel Blair mentioned, the issue of fees. Obviously, there are proposals to introduce fees for peals, so that's one issue, and the other side of that is the potential for retrospective increases to rateable values being the other issue. Obviously, two very important issues. Any comments on either or both of them? Again, switched to a more frequent revaluation cycle necessitates a massive drop in appeals. I understand that, at present, only 8 per cent or so of appeals are actually successful, and in the experience of our members, unrepresented businesses are almost never successful in their appeals. What I, in relation to fees and fines in association with lodging an appeal, I suppose the argument again, I would say, if the fee structure was proportionate, perhaps tapering down to zero for the very smallest businesses and it results in a significant improvement in the appeals process, then that's something that the small business community can accept. However, with this new fee income has to become a significant improvement in customer service. I'd echo what Stewart's just said. I think proportionate is one thing. Service is what you pay for as you expect to get back a good service within the timeline and affordability at different levels of scale of business. Again, I would just pick up on what David's point was about on profit as opposed to turnover. I think you've got a lot of different-sized businesses that are making potentially a lot more money on the bottom line than the larger businesses proportionate. There needs to be an agreed way of approach to that. Do you see the differentiated fee structure depending on criteria to do with size or turnover or profit or whatever? Absolutely. There is such a wide scale of business space there as well. We want to encourage future investment and growth, et cetera. We don't want to penalise. However, at the same time, like anything, you expect a service back to be given. There are umpteen different discussions of different services that are currently provided that many would question as to whether or not they're actually worth the value that they're paying in return. Expectations are high. We will move on to the anti-avoidance now. Thank you. We've already touched on some of the loopholes that are currently in place. Within the bill itself, there's a section about tax avoidance and the whole process of how that is working. It would be good to get a view from the panel as to whether the anti-avoidance measures in the bill, which deal with empty premises, are strong enough and they will close some of those loopholes or do you still see that being an ongoing problem? For our part, we've not really touched on that in our written submission. It's not something that members have really brought to our attention. It's not been one of their top issues, to be honest. I'm simply not aware of it being a systemic problem. It might be for others, but not for us. We're in a sector—your colleague was talking about profits. It's been quite difficult to get profits if you're a retailer in the last few years. The profitability of the sector has halved over the last five years. It's a low-margin business. It's somewhere in the region of about 3 to 4 per cent, so it's different to a wide range of other sectors, but we're not conscious of an issue. There are some retailers who do not use their premises. They end up ensuring that the business isn't alive and running from that location, but there is an attempt to ensure that the business is being utilised or that it appears that the owners are somewhere else or that the building isn't being used or that there are various options to that. There are loopholes that businesses are actually at the moment ensuring that they benefit from. Within the whole bill, we're talking about trying to clamp down on some of that to ensure that there is this change and that the avoidance is going to be taken on board. A problem with companies or other organisations' rate payers are believed to be avoiding their responsibilities. Certainly there's no problem with them clamping the government and agencies down on that. The fact remains that, at the moment, the structural change within retail means that a lot of retailers have come out of retail premises. I think that the figures were published last week that there's been an 8 per cent reduction in the number of shops in Scotland over the past 10 years. Retailers are in the business of making money, where they're not making money from a particular unit or site. They hope to try and exit that, either change it round so that they can make money or try and exit it. One of the shifts that we've seen in recent times has been towards much shorter periods of leases than we've had historically. That could potentially come back if the economy improves and various other factors, but they're not in the business necessarily of wanting to shell out lots of money for units where they're not trading. Obviously, we've seen quite a lot of, as I say, retailers exit properties over recent times. I'm not conscious of it being a particular issue. I suppose that you talked about empty properties. We broadly support the move for the small business bonus no longer to apply to empty properties. That's a tweak that we can support and live with. Generally speaking, our typical members are not necessarily going to be involved in complicated tax avoidance tactics. Again, we can broadly support the measures in the bill. The financial memorandum also highlights evidence from England that, in the rate system, the level of tax avoidance is 1 per cent of the amount on the roll. In comparison to other taxes, it's perhaps not as much of a problem as other taxes, but it's good that local authorities will have the legal powers to try and address some of those problems. One of the other points that we make in our submission is that it's all well and good for having new legal powers, but we have to have a well-resourced rate system if local authorities are going to have the powers to check whether the existing reliefs are being used as they should be. On the exact issue, there is the potential for a financial burden on local authorities in managing the situation. That may have an impact as to how effective and efficient they are going to be in ensuring that the rate situation across the business sector is supported. Do you have a view on what would happen in that situation if there is an added bonus and an added burden on local authorities? That may then take some time, because we know that they are having to do a lot more with less and the number of staff that they have and the resources and the manpower that they have. Does that have an impact on all of that that could impact on your own sectors? I have real sympathy for the rates teams in local authorities when I have chatted to them, because often there are 0.8 full-time equivalent staffers and there are quite significant local authorities. Probably the way that I would think about it is that if you automate as much as you can, they are not dealing with paper forms and they are not dealing with the machine runs itself except when something breaks. They can go in and spend their time as professionals, checking where appropriate, checking out, having the time to look at the data, to look at things that do not quite look right rather than processing paperwork. That would be my suggestion. Any other views now? Anyone else content? I have three quick questions to mop up on some things that have been said and some of the evidence that you have given. If we could start with the charity retail association, Rachel, you mentioned this postcode lottery, where some charity shops get full relief and some just down the road sometimes don't. What is it that you are asking for there? We are seeking for local authorities to grant all charity shops 100 per cent rate relief, so to take the 20 per cent and make it 100 per cent. We are concerned with inconsistency across local authorities. What we see is members who are unable to plan long-term because of potential changes to removing relief. Recently, Murray Council chose to remove the 20 per cent discretionary relief from charity shops there, so that is of concern to the sector in the area. That is just one example of how changes can happen quickly, which we find does not really sustainable. I was not really clear on when you said in your evidence that you could have one shop, presumably in the same place, get the relief and another shop just down the road. Is that because councils are zoning this relief? Different councils have different policies. Again, it is up to councils what to do, so some will grant it to all charity shops, some will set a specific criteria, so they might say that charity has to be local or has so many number of shops. It is up to the council to decide and that is the 20 per cent at the moment. It really is up to the council what that policy is. Your suggestion for the bill is that there should be mandatory 100 per cent. If I could then turn to the FSB, you mentioned in your submission the appeal system and how it could be moving into the tribunal system. I wonder if people have any thoughts on that. Anyone can answer this, I guess, but whether that is a good thing or not. The move into the tribunal system predates Barclay. Again, our members' experience with the appeal system has not always been brilliant, especially if you are an unrepresented rate payer that you have not forked out for professional property advice. Whether the move to the tribunal system is probably going to be a much more formal process that has its drawbacks, but at the same time it is likely to be more professional. My understanding is that the move to the tribunal system is not professional now. The feedback that we have had from members is that the experience that they can have with the current appeal system can vary from place to place. There can be inconsistency. At present, the way that the assessors discharge their appeals is individual. You can only really understand that if you have tried to follow the rate system for some time. Again, the lay business owner is not necessarily that familiar and moving it into the tribunal system will hopefully provide better information about how that system works for those without a specialist understanding. The move to the tribunal system also necessitates fewer appeals. Again, if there is still the same volume of appeals at the next revaluation and we have moved into the tribunal system, we are probably going to be in trouble. One of the things that I recommend to the committee is assessing the robustness of the changeover to the more frequent revaluation cycle. I am just so clear that currently, if you appeal, you go, that is dealt with locally. Yes, but at present, there is almost a pre-appeal stage where you can enter discussions with your assessor, which is basically at the discretion of individual assessors. Then there is the formal appeal system. Again, a share of the appeals lodged fall off the system before they eventually get seen. The data about those numbers can be a bit foggy. Only those that end up in the final stage are counted in the official statistics, as I understand it. Does anyone else have any thoughts or experiences of the appeal system? Can I just ask a question on the point that you raised? You said that the pre-appeal meeting is down to the assessor. Are you suggesting that, in some areas, you do not get the opportunity of that, or are you suggesting that it is the outcome that is down to the assessor? Most of those discussions happen at the point of revaluation. I can only speak to the experience at the last revaluation. Many people phone up their assessor and say, I have got this new valuation through. Different assessors have had different approaches. I know that the assessors have their own programme of reforms that are working to try and standardise their approach. Obviously, the test of that new approach will be at the next revaluation, but, historically, in our experience, different assessors have taken different approaches to this discussion period at the point of people getting draft rateable values. Examples of some of our members have said that pre-appeal has literally been a phone call at sometimes even in the car, and a discussion has been had. Giving it that security of a last stop through a tribunal process is maybe the way to go forward, but, in real terms, the volume of appeal has to diminish, and that potentially could happen with an electronic approach. One final question is based on something that Scottish retail consortium said in your evidence, which I thought was very interesting. You mentioned the fact that business rates are paid on car parking spaces, which they are, and that's why you'll often see on business parks in particular car parks are actually closed off, so you can't use them. Therefore, business rates aren't paid. You mentioned that it cuts across another piece of legislation, which we're not here to talk about, which is the transport bill and potential workplace parking levy. You described that as double taxation. If we can just stick to business rates and not the workplace parking levy, are you suggesting that something needs to change there? In fact, I was in front of one of your fellow committees a few weeks ago on the issue of the workplace parking levy, and the fact remains that, as I understand it, councils are set to get this power if the legislation is passed. If they do introduce it, they'll be charging, as you say, a levy, if you like, on a part of the valuation role that's already paying business rates. That's double taxation. There may be other examples of double taxation in our both devolved and reserved taxation system in the round, but that doesn't seem to me like a particularly sensible way forward. I think that there are a number of other concerns that we have about the workplace parking levy, but adding to the burden is probably not the most sensible one. As I said, the poundage rate, the tax rate is at a 20-year high, and a number of these parking spaces, depending on what property they're actually building they're associated with, will already be subject to the large business rate supplement as well, which, as I said, is twice the rate in Scotland than it is south of the border. We're in the fourth year of the large business rate supplement having been doubled, and over those four years, rate payers in Scotland will be paying an extra quarter of a billion pounds for retail alone that's somewhere in the region of 45 to 60 million pounds extra that they're paying because of the doubling of the large business rate supplement. Okay, right. Thank you very much, Kenny. Yeah, the UK Government, of course, charges VAT on taxes such as tobacco, alcohol, fuel duties, so it's actually quite a common occurrence on very large scale and we all probably pay quite a huge amount of money actually in terms of these double taxation, that doesn't mean it's right, but it isn't uncommon. I want to just touch on a couple of things, convener, so good morning panel. First thing, if you meet yourself, Mr Lonsdale in your submission, I've found a paragraph 25 particularly interesting, where he said that ministers are forecasting at the annual cash value of rates reliefs will have increased by £150 million over the four years until 2020 to £750 million, a 27% uplift. The value of reliefs is a share of the total take for business rates rises over the same period from 21.6 to 26.9%. You go on to say that the system only seems to function through myriad exemptions and reliefs that continue to grow as an overall proportion of the total amount paid in business rates, the use of these sticking placers under lines of need for more regular re-valuations. You earlier talked about the poundage being at a 20-year high, so it seems bizarre in a way that we've got rates relief at a record high and we've got poundage at the highest level for 20 years. Do you feel that what might be a better way of addressing the issue is to have fewer reliefs and a lower poundage overall, and if so, what reliefs would be removed? Certainly, one of the aspects of the bill is putting on a statutory footing the business growth accelerator, and our colleagues down south have picked that up and are saying that in England there should be something similar to that as well, but over a three-year period in order to allow firms to recoup the actual cost of commercial property investments and things like that. We fully accept that there will be rates discounts, there will be reliefs and things like that, but I think that the broader principle about having more regular re-valuations and keeping down the overall poundage rate or tax rate is a sensible sort of starting point for looking at all of these things. Yes, there'll be cases where you do have to have reliefs and I think that Stuart was talking earlier on about there's going to be a review of the small business bonus scheme, for example. We've been supportive of that, but I think it's right and proper that from time to time you do look at individual reliefs and check whether the rationale is still pertinent and whether they're delivering value for money. Clearly, Mark Lee did that, and we've been broadly supportive of that. It almost seems that the poundage rate is being increased to take account of the number of reliefs, but you're yourself, I'm not stuck. I think that FSB strongly supports the small business bonus and the help that it gives smaller firms. The most recent survey work that we've done on the small business bonus suggests that if the scheme was to be abolished, a fifth of those recipients would amend their growth plans. A fifth said that they'd cancel planned investments and a fifth said that they'd close their doors completely. Going into the small business bonus review, we're going to stand up for our members that currently get this important help from the Scottish Government. I would highlight that there are a small number of our members that pay the large business supplement and that there might be work there to ensure that smaller or medium-sized firms don't accidentally fall into that tax bracket. I think that we've tried to be as constructive as possible talking about tweaking the small business bonus, suggesting, for instance, that it shouldn't apply to empty properties, trying to be as constructive as possible in ensuring that it goes to the right businesses and will continue to take that approach. Mr Cruffle, what do you… I mean, I think there are, many of our population are obviously small businesses and again we support the review of the scheme, but we would, as you've seen in my submission, caveat it quite heavily around recognising the importance of tourism businesses in the communities and what they do for the wider economy there. I think the other side of the coin to consider is we've long term argued that the £51,000 figure of rate will value in many of the hospitality sector actually doesn't necessarily mean that's a large business and therefore they tend not to operate in that scale, so maybe some of that looking at the scale across the valuation measures. Overall, we have to, I think, going back to what's been said several times this morning, the frequency of the valuation process will allow, hopefully, that not to require such incrementals, but the small business bonus scheme review, again, there needs to be a fairness across the whole approach and I think it's timely for that review and is that incremental poundage funding, that small business bonus scheme arguably, to what extent would that make a significant difference, but justifiably the review. I want to go on to you with the next question so obviously you can answer the question that you've already asked, but just as I asked this one that you said at the beginning of your evidence that there's 900 charity shops in Scotland, you say about a third are effectively get 100% relief, but of the 600 remaining, how many of those actually get support from the Scottish business, the small business bonus scheme and what's the average do you know of rates that are paid by their remaining shops, do you know? I don't have the exact figure, but I can try and get it for you and send it to the committee afterwards. What I would say is that rate relief is essential to the vitality and the viability of the charity retail sector, which provides economic, social and environmental benefits. I think that those benefits make the relief cost effective for the taxpayer. In 2012, when the Scottish Government did the business rates review, it showed that the charity shop rate relief cost £9.3 million, which equated to only 1.7% of the total business rates relief applied. I'm not sure how small business bonus fits into that, but ultimately what we would say is that rates relief for us is vital to our on-going. You also talked about footfall increasing because of charity shops, and I think that that's undoubtedly true. The FSB and others might argue that charity shops run my volunteers who are getting 80% or 100% relief and are providing unfair competition to some of their businesses. Has there been any assessment done by the FSB or the charity sector? What we would say to that is that charity shops are not in competition with other high street players, they are a partner. Our shoppers want to see variety on the high street, and that's what charity shops provide. Another way to look at it is environmental benefits that charity shops provide. They can now play a position in developing a circular economy, maybe for consumers to look at more ethical ways of shopping. It's important to make sure that we're not looking at charity shops as enemies or competition, they're just another partner on the high street. I think that charity shops have a role in our high streets and our town centres, but on the other hand there's no doubt that when you go down a high street and there's a huge number of charity shops, that feels like a symptom of a place that's on the decline, but I would say that the way that we fix that is having more organisations competing for those units on the high street. It's about getting other players, rather than just independent businesses and charity shops, it's about getting big business in the public sector back into the centre of our towns, taking those spaces that at present independent shops and charity shops are trying to fill. We would inform, when we were in Kilmarwick, that some providers of retail space have allowed charity shops to move in and rent free simply because they cannot get other businesses and they do add something to the high street. Is that something that you would broadly agree with? Rachel, in her submission, said that as a result of charity retail, 330,000 tonnes of textiles were kept out of landfill, reducing carbon emissions by 750,000 tonnes, for example, so there are other benefits, but do you see that? Do you see that that they do allow empty spaces that otherwise would not be taken up to be filled? The retail industry is changing and will continue to evolve, and certainly you and I were a landlord, you may be out with your political hat. It's very understandable for landlords to look to others to try and take on some of this space. If that adds the footfall on the high street to our town centre, that's great, but the fact is that public policy in the round, both at a Scottish and a UK level, is pushing up the cost of having a store footprint, whether that's the premises or indeed the cost of employing people. Obviously, in an era where there's profound change going on, consumer spend is weak in terms of its growth and costs are rising, something has to give, and as I said earlier on, the number of shops has decreased. If I may convene, I'm just conscious of your time, and I no doubt you'll seek to wrap up. There is a link that you mentioned at Write It Out set about the visit to Camarnac and you met firms concerned about the cliff edge. You put it in terms of small firms rates relief. There is a cliff edge of sorts when it comes to the large business rate supplement. It's at £51,000 rateable value, and as soon as you go above that, because it's a slab tax, you pay the rates on every pound whether your rateable value is zero at the top. There's another issue there, and as Stuart said and as Ken Barkley said in his report, that tax applies to many small and medium-sized businesses. The name is a bit of a misnomer in terms of just being large organisations. We did hear from a company that was directly affected by that in Camarnac, who would want to stay in the town and employ an additional number of people, but they felt that because of the lack of tapering in that slab, they were unable to take that risk. You've been paying attention earlier, Kenny, because I brought it up. Yes, and we did bring it up a bit, but I've just specifically mentioned it, so it's part of my question. That's the session complete for just now, so I thank the panel for attending today's session, and I suspend this meeting to allow for a witness change over. Thank you very much. For today's session on the non-domestic rate Scotland Bill, I'd now like to welcome Ken Barkley, former chair of the Barkley Review of Business Rates. I appreciate that this is a late agenda change with Mr Bartley's attendance confirmed just yesterday, and we're really grateful for being able to attend today. We'll move on straight to questions from the members, and I'm going to ask Andy to kick off the questioning. Thanks very much, convener, and welcome, Mr Barkley. Thanks very much indeed for coming along at short notice. Broadly speaking to begin with, do you feel that the recommendations of your review group have been broadly put into practice both through the non-legitif measures that the Government has announced and the primary legislation that they have brought forward in this bill? I'm not sure that that's really my position to respond to. What I would say is that over a 14-month period, we consulted with many people and determined what we thought was in the best interests of the brief that we were given by Scottish ministers. I haven't been involved with that for the past two years, and I guess it's up to the Scottish ministers to determine how much or how little of the recommendations that we made are brought to bear and how much of it comes into through primary legislation. Okay, fair enough. There were two recommendations that the Government has not decided to take forward. One of those was recommendation 28, where it recommended that all properties should be entered in the valuation rule. Currently, agricultural land, foreign military bases and membercies are excluded. Presumably, you still think that that's a good idea, but the Government's not taking it forward. Have you any thoughts? The view of the panel at the time was that we felt that it was important that all property was put on the register. That was certainly the view of the panel at the time of the review group. What it would have been able to have the public see was the extent to which public subsidies were given to certain elements of the industry that we highlighted. It's entirely for the Government to decide whether they want to pursue that or not. Okay, and the other one was the large-scale commercial processing on agricultural land, which the Government has decided not to take forward. I'm sure that you wonder what kind of examples without naming individual businesses, but what kind of examples were you looking at in that kind of recommendation? To give you an example, it would be that if an abattoir was on agricultural land, it would be exempt from paying tax, but an abattoir on a brownfield site would be subject to tax. In order to level the playing field, we felt that it was appropriate to make that recommendation in our paper. Would the same situation arise with, for example, an ice cream factory or a biscuit-making factory? I guess that if agricultural land was being used for that purpose, the answer to that question would be yes. You had formal recommendations, but you also had other issues that you were considering. In Annex C7 in your review, you had an interesting recommendation, ensuring that every rate pair pays something. You don't go into what the something should be, but can you just elaborate on the principle behind that thought? It came about as a consequence of many small businesses that we spoke to, feeling that there had been a disconnect between the understanding of what non-domestic rates were for. They were to contribute to the provision of local services. A description that was used to me when I was on the road was that some high streets had become rates deserts. Basically, nobody paid any non-domestic rates on them. Many of the small businesses that we spoke to said that they would be prepared to pay something towards the local services that they were effectively in receipt of. We did not ever get to the point of determining what level people were comfortable with, but that is what many of them said. One of the challenges that we found when we were going through this was what is a reasonable amount and what are the costs involved of the collection. If the costs of collection outweigh the amount involved, then clearly that is a false economy. Ultimately, we felt that it was not something that we were able to recommend to ministers. It was not something that we were able to recommend because you could not reach a resolution of the cost-benefit analysis, rather than that the principle was in doubt. We were unable to determine whether or not the cost-benefit analysis made any sense. Ultimately, that is why we decided that it was important that the overarching review of the small business relief scheme was a far more important way to go about it. Can I ask Mr Bartley—I think that you were in for the previous speakers when they were talking about the views on your call for a large business supplement to be brought in line with that in England? Can you give me your rationale for that? I would say simply that our view at the time was that it was important that Scotland was seen and that it had been expressed by ministers that Scotland was the best place to do business. One of the ways that we could recommend that that be done was by reducing the large business supplement down to the same level as that which was in England. Okay, thank you. You clearly—the review was a while ago, but have you taken a view since the time to pass, since the review about developments in local taxation and economic context needing a further reform at non-domestic rates? I think that all I consider that, convener, is that I stand by the recommendations I made in 2017. I haven't been involved in any way, shape, professionally or privately in rates since that time, and I discharged my duties to the best of my ability. I've got one question here about day nurseries. The Government's approach to implementing relief for day nurseries and the perceived unfairness at non-profit nurseries co-located in school grounds still pay rates. Have you got a view on that? I'm afraid I don't, convener. I'm not able to respond to that. Right, that's not an issue at all. I should have talked—Alec, you wanted to come in. Yeah, that's actually a quick question. The last panel that we had talked about the friendliness or otherwise of dealing with the whole process and the system, and as I said to them as an MSP, I found it quite difficult trying to help small businesses, in particular, when you contacted the council and just understanding that. Have you got any view on that? They seem to suggest that, actually, if you put in some, I don't know, improvement service and customer relations, you could actually get a better dialogue. There are a number of issues that we felt could be improved and we've highlighted them in the report. I had understood that some of those were now in a consultation process between the end users and the process through which they go with assessors. More than that, I really can't add, I'm afraid, Mr Rowley. Liam, do you want to use some questions around schools? I'd like to thank you for coming in as well, Mr Barkley. I know it was very last minute, but I really appreciate you being here. One of the areas that we've been looking at as a committee, and it stemmed from one of your recommendations, was the idea that we would remove rates relief for independent schools. That was your idea. Can you first of all ask where that idea came from? Yes, certainly, of course. Is this coming on, or are you hearing me appropriately or do I? The idea stemmed from the fact that one of the guiding principles that we adopted was the issues of transparency and fairness and making sure that people were on a level playing field with one another. It was quite apparent to us that, since state schools were paying rates, it was entirely appropriate that independent schools should pay rates too. I can anticipate the next question, which is perhaps that the state sector shouldn't be paying and the public sector shouldn't be paying rates. However, when we spent some considerable time with members of the public sector, be that the health service, the prison service, the Scottish water, the enterprise agencies, we asked them the very question about whether rates should be paid by the public sector, because it's a fundamental point. People argued that it was effectively money just going around in circles. For context, it's about 15 per cent of the total rates bill, I believe, about £1 billion, as of the time that we presented our report to ministers. When we spoke to the prison service, the prison service said, well, we didn't think that it was appropriate for us to pay rates. The conversation evolved into acknowledging the fact that there were private prisons in competition with the state prisons, and private prisons paid rates. Therefore, it was entirely appropriate that the prison service reflected that they also paid rates so that we could create a level playing field, which was one of the principles that we adopted at the outset. When we spoke to the enterprise agencies likewise, they said, well, we need to pay rates because we are talking to businesses that pay rates, and therefore it would be entirely inappropriate for us not to be paying rates when the very businesses that we are dealing with are equally paying rates. When we talked to Scottish Water, they said, well, to all the intensive purposes, we are treated as a private company, albeit in state ownership, and it's entirely appropriate that we should pay rates. The story went on. If we talked to the health service, they recognised that they were in competition with private hospitals, private hospitals paid rates, and the health service paid rates. Therefore, we get back to the point that I mentioned at the outset, which was, well, should the schools be paying rates? Well, the answer is, if you are treating everybody equally, since the state schools are paying rates, it was entirely appropriate that the independent schools also paid non-domestic rates. Except that the independent schools are classed as charities. If we are to be consistent across the charity sector, you wouldn't discriminate between one part of the charity sector. In this case, it represents only half a percent of the charity sector and the rest. The upshot of this idea is that we actually do that. In Oscar's evidence to us, they describe that as creating a two-tier charity sector. First of all, would you accept that? If that goes through, we would create a two-tier charity sector, and that has implications potentially for charity law as well. I think that all I can do is reiterate what I said in one of the earlier questions that is really for ministers to make their recommendations to this panel and decide what it was appropriate to be putting into a bill that requires primary legislation. I think that I have fulfilled my duties in making that recommendation. It is for ministers to determine whether they want to proceed with it or not. Well, it is, but except that the idea came from you and your review. Do you accept that your recommendation, if it goes through and it becomes law, will create a two-tier charity sector? I am not convinced about that. I looked at it on the basis of fairness, we looked at it on the basis of fairness and I felt that it was appropriate to level the playing field between the state sector and the private sector. If private and independent schools did not pay rates, would that not be creating a two-tier education system or a two-tier rate system? If, for example, the independent schools did not pay rates, would that not then, by itself, create a different fairness and education system or in the rates system? I think that that was my point. I was trying to level the playing field between the state sector and the private sector, and therefore that was the recommendation that we made. You could argue that there is an unlevel playing field at the present time, which I was trying to do something about to endeavour to level that playing field. If that is okay. Given that this does have big implications for the charity sector and potentially for charity law, I presume that you spoke to the charity regulator, Oscar, in this. Would that be correct? We are invited to Oscar for their comments at the outset of this process. As far as I can recall, I do not think that they replied. You did have witnesses in, so did you invite Oscar to come in? We invited Oscar by email to submit a proposal to us when we were seeking evidence from multiple individuals and organisations at the outset of the process in 2016. They did not respond. We have heard evidence, which you will not have heard or accept, but we have heard evidence from some players in the independent school sector that they are on the brink. They are struggling. If that was introduced, it could actually push them over the edge and you could see schools closing. Given that that is the case, with the benefit of hindsight, would you change your mind on this? I am sure that that is not what you want to happen. I am afraid that, Mr Simpson, I can only respond to the basis in which I was instructed to give my brief. It is entirely inappropriate for what I think now. Relative to the changes that have taken place, my responsibilities were to submit this report to ministers by the late summer of 2017. If my opinion has changed in the intervening period as a result of changes that have taken place in the wider economy, there will be multiple changes that have taken place. It is really not my place to come back and suggest that alternative arrangements should be made. You must have an opinion, though. As a result of something that you have recommended, potentially schools could close. You must have a view on that. I am afraid that I am going to be drawn into something that I think is inappropriate. I would say, convener, that I have made my point very clear. I think that it was entirely appropriate for me to make my opinions known at the time. If circumstances change, it is really up to Government to take account of the changes that have taken place in the intervening period. Let me put it this way. That would not be what you were trying to achieve. The closure of schools. I think that we have finished with that line of questioning. Mr Bartley has made it quite clear that he is speaking as ahead of the review group. Sorry, had you finished here? Yes. Thank you very much. Andy, you wanted to come in, Alex. Alexander, do you want to come in as well? Yes, I was just briefly following up the school's question. I am just curious how you approached this question. You said that it was because of levelling the playing field. I noticed that, at the outset, you agreed to embed as far as possible principles of fairness, consistency, transparency, simplicity and accountability. Presumably, that comes under the heading of fairness. You are levelling the playing field. I am not sure that I allocated a principle to every a recommendation. No, but it was levelling the playing field. Were you looking across the whole rating system and seeing where there were potential uneven playing field, as it were, between similar properties in the same sector, for example, or did the independent schools arise as a specific? Did someone suggest that they should pay rates, or were you looking at all the different reliefs, to see how much money could be generated by changing them, or how did you arrive at beginning to consider this question? I cannot remember whether there was a moment in time when it was felt that that was an appropriate basis in which to put this on the table, as it were. Whilst we were aware of all the reliefs that were available, we did not start to reverse engineering solutions into wherever the largest reliefs were, because it was just a question of what are the facts available to us. It was quite a simple question of saying, is this fair? Is it fair that independent schools and state schools are treated in a different way as far as the payment of non-domestic rates is concerned? We concluded that they should be, and therefore, as a consequence of that, we made that recommendation to Mr Mackay. If I were to put it to you, one of your remit included the instruction that your recommendation should be revenue-neutral, broadly speaking. I put it to you that some of your key recommendations that were designed to boost economic activity involved the reduction in rates liability, therefore there would be a reduction in income. You had to find some money to make up that reduction to ensure revenue neutrality. If I put it to you that you looked at all the reliefs that existed to find out whether they were capable of being tweaked or abolished or impart abolished, would that be a fair characterisation or would that not? That would be a fair reasonable characterisation of the process through which we went. We looked at all reliefs and had to determine whether or not they were providing an appropriate level of economic stimulus or they were actually fair. It would be fair also to say that you did not go into examining these reliefs. For example, the small business bonus scheme decided that rather than tink with that, you would recommend a review of that. You did not go into huge detail on all those reliefs, presumably given the amount of work that that would have involved. It depends what you mean by huge. If you could give me an example, I think that it might help and I can respond to a specific question rather than a generalisation. To say so, the empty property relief, for example, did you gather a wide range of evidence and analyse the numbers and look at it over time and all that analytical work that would be required to evaluate whether it was still a relief that was justified or not? That is a fair point. In addition to the report that you will no doubt have seen and read, there is a plethora of additional information that is publicly available. There are reams of reports in there that you can review and establish the work that was undertaken. However, it would be fair to say that over a relatively short period, which was the time of the review from around about 14-15 months, we were able to look back and did look back to establish some facts. However, of course, we were not reviewing something over a long period of time. You could argue that there are many of the recommendations that we have made that some of the other recommendations that we felt we could have made but did not at the back of this report would undoubtedly have fallen into that category of requiring significantly longer time to determine, for example, land value tax. We could not possibly have come up with a fully blown recommendation to change the fundamentals of non-domestic rates to a land value tax in the timeframe that we had available, because, for example, it needs to be looked at with council tax as well. There were crossover issues like that that clearly would have required us significantly longer to come to a conclusion. We have mentioned many of those in the appendices of our report. In some senses, that should not be seen as the end of the legislation, perhaps, given the challenges. I do not know whether you looked at town centres, specifically versus out-of-town retail. Is there anything in the non-domestic rates that could assist us? I know that the last panel talked about the powers that local authorities have to exempt areas within town centres, but that costs money. They have to pay for that, which they have not got. Can rate system or some form of taxation help town centres? I recommended, and I from recollection believe that Mr Mackay adopted our recommendation on fresh start, which was exactly to encourage the use of empty properties in town centres. In fact, I believe that he may well have gone further than we did. We might have gone further at the time, but we were not in a position to do so because it would have cost us more money than we had available from the changes that we were making. I think that fresh start was a very good example of where we were endeavouring to find ways of occupying empty premises, particularly in town centres. We had COSLA, and they were keen to stress, and it is back to my point, like this legislation is coming through just now, but do we need to look again? They were keen to stress that there is this review that the finance sector tree announced, where they are looking at council tax. Should non-domestic rates be looked at as part of a wider review? If a decision was made to look at devolved taxes in the round, then that would clearly be a decision that was made for the Government of the day. It is certainly not my position to give a particular review on whether or not a further review of non-domestic rates needs to be undertaken. Finally, I can ask you—I know that you will say that it was a recommendation, but the allios, back to your question earlier about fairness, principally fairness, is it not as it is right for ministers to pick and choose what is fair and not fair, but my understanding is that the main reason why the Government did not proceed with allios is the impact on local authority budgets. It would have been quite devastating. What was your take on that? Why did we make that recommendation? I think that I can probably best capture it by, admittedly, an anecdote, but by some fact, which, if I remember, I will come back to in a moment. We had an evidence session at which one of the deputy leaders of a fairly significant council attended, and she was very clear in saying that the only reason that we put these public assets into allios is to reduce the tax rate that is due and payable on them. Otherwise, we wouldn't. That, to my mind, was an opportunity for us to look at this and say, well, is this fair? We concluded that it was something that needed to be addressed, and that is why the recommendations that we made as we made to ministers. Going back to the facts, if you look at one of the charts, I am afraid that I cannot remember, because if I had been able to go through this several times in the time that I had available, I would remember the exact paragraph. However, if you look at the charitable relief that has increased, we chart over several years the amount of relief that is made available to the various categories. Far and away, the biggest one is charitable relief, and it is not the charitable relief that the predecessor in here is talking about. This is charitable relief going to allios, and the amount of assets that were being moved from local authorities into allios over a relatively short number of years was very considerable, and we felt that that was not appropriate and that it needed to be addressed. Thank you very much, Alexander. Do you want to pick up on the school and then I'll go on to something else? I understand and acknowledge why you chose to. You've talked about the fairness and equity, making sure that they were equal and there was equity across the peace between the independent sector and the state sector. During all of that, how much analysis did you do about what potential knock-on effect might be to the state sector if the independent sector was, as my colleague Mr Simpson indicated, knock-on effects about the viability of some of those schools? I don't think that it was appropriate for us to do the analysis of individual independent schools to determine whether or not the impact of this change was going to have such a devastating effect. I think that it's probably worthwhile giving some context for the panel. That context is that there are about 35,000 at the time of writing this report. There are about 35,000 pupils at independent schools in Scotland. Our assessment of the work that was done and that, again, is publicly available in the archive. It would bring in around £5 million. That equates to about £150 per pupil per annum in addition to the fees that are payable. The average fees in Scotland are around £12,000 a year, so it's 1.25 per cent over and above that, which they're currently paying. In that context, that was enough for us to say that that shouldn't be enough to make them unable to either pass that fee on or absorb some of that themselves. Some locations, just because of the location example here, Edinburgh, has a much larger percentage of private schools, independent schools. They collectively have a bigger potential burden on the local authority if things don't work out within this whole sector here in Edinburgh or somewhere else, such as Perth and Cronross, that once again has a larger sector of that community. Did you look at that when you were looking in the round? I think that I've explained what we looked at. If further analysis needed to be done following our recommendation, I believe that that was ultimately for ministers to determine what was appropriate or not. Your recommendations—some people have been in their submissions to us as we've gone on through this process—have talked about additional burdens that may well happen in local authority, that may well happen in the assessors. Was that your intention at that stage that you envisaged that that would be the case, that by having some of those recommendations you would be adding extra burdens or pushing on to local authorities information that would give them that extra? I think that in every—if you check the 30 recommendations that we made, some of them will have a quantifiable amount that was either costing the taxpayer or was being relieved to the taxpayer. Many of the administrative recommendations that we made were exactly that. We make a comment on that that says, yes, that this is not material, but we recognise that there will be additional administrative burdens placed on either the assessors or the local authorities to ensure that this is implemented. Okay, thank you. Kenny. Yes, thank you. Mr Barclay, just following on from the previous panel, I'm just interested in the issue of charitable rate relief for charity shops. I'm just wondering why you decided to 80 per cent to be retained and not—you shouldn't have got to 100 per cent to be dropped to 60 or 50 per cent. What was the kind of thinking behind that? I mean, obviously you've heard the evidence about their enthusiasm for it being 100 per cent. I'm just wondering why you felt 80 per cent was the right figure. That was what was effectively a central—as I recall—a central government agreement that they would subsidise down to 80 per cent. It was then with the local authority as to whether that additional 20 per cent—my recollection is the additional 20 per cent. As far as I was concerned, that was okay, and we concluded that that was a perfectly legitimate rate to alleviate the charity shops off and recommended no change. Yeah, okay, so you didn't feel there was a strong enough argument to go to 100 per cent relief, for example? We did speak to them in an evidence session and they put forward their point of view and we decided that the status quo was entirely appropriate. Why was that that the status quo was entirely appropriate? The previous Rachel Blair on behalf of the sector said that that obviously meant that some local charity shops struggle with that rate scene with the 20 per cent where the council doesn't provide that relief. To be honest, Mr Gibson, I am struggling to remember the reason as to why we determined that 80 per cent was the right number and not 100 per cent. I think that if you'll forgive me, it would be appropriate for me to respond formally to that if you would through Mr Dornan and clarify our thinking if that would be okay. I've just, it's two years ago, I've forgotten the exact detail of it. Thanks very much. Good morning, Mr Barclay. Two, I think relatively quick questions. One was an issue that was raised in the written submission from the Scottish Retail Consortium to the committee, but actually wasn't discussed today and given your expertise, I just thought it might be in order to pose the question. They talk about the deposit return scheme and the need therefore for shops to have store refits and purchase, potentially reverse-finding machines, and they say that they're concerned that these changes could be classed as improvements and consequently impact on rateable value. In broad brush, is that a realistic concern or is that perhaps overregging it? I'm not sure I know the answer to that question, to be honest with you. What I did recommend, what my commission did recommend, was that we asked the Government to review plant machinery in some considerable detail, and I don't know whether or not anything has happened there, but we felt that the complexities around improvements were so complicated and the expertise didn't exist within my group to determine what was the right way forward. Secondly, the last time a plant machinery review had taken place, it took them, I believe, two or three years to reach the conclusions and recommendations that they did. Therefore, I don't think that it was appropriate for us to try to cram that into the time that we had available, and that was the reason that we made a recommendation. I think that's the sort—if that is something that the Government decided that they want to pursue, it seems entirely appropriate that the example that you've given would be included in the plant machinery review for all businesses. That's very interesting. Thank you for that. Just a last question. We had your report, the recommendations, we've got the bill, we're going through that. There would probably be some tweaks to that, I would imagine. That is ever the process in this Parliament to get the best legislation that we can. The legislation then gets passed. How long do you think it is before we will need a Barclay 2 review? In the spirit in which that was intended, I trust that it won't be Barclay. Thank you. Just going back to the schools issue, you use the word fairness quite a lot. One of the recommendations—I think that it's actually in the bill—is that some independent schools will retain relief, music schools. Why some are not others? Why not schools specialising in sport or science? That may be a question for the Government, Mr Simpson. I don't remember identifying a music school or the music school in Scotland as receiving particularly different treatment. I certainly don't recall that, and I think that's one for ministers when they speak to you. Does it pass your fairness test? Can I reiterate what I said? I made my recommendations to Government at the time. Whatever they have decided to do or change in the intervening period is a matter for them. My brief was to deliver this within 14 months, and that was what I did. I'm really here to answer questions about the recommendations that I made, rather than the opinions of others subsequent to that time. Thank you very much for attending today's session, Mr Bartlett. That was very helpful indeed. I further evidence session will take place in the bill at our next meeting on the 4th of September when we will hear from the Scottish Government. I suspend briefly to allow the witness to leave the table. Agenda item 3 is the consideration of negative instruments 195 and 204 as listed on the agenda. I refer members to paper number 3, which contains further details. The instruments are laid under the negative procedure, which means that their provisions will come into force unless the Parliament agrees to a motion to annul them and no motions to annul have been laid. The Delegated Powers and Law Reform Committee considered instrument 195 at its meeting on 18 June 2019 and determined that it did not need to draw the attention of the Parliament to the instrument on any grounds within its remit. The DPLR committee considered instrument 204 at its meeting on 18 June 2019. It reported that the instrument does not respect the rule that at least 28 days should elaps between the laying of a negative instrument and the coming into the force of the instrument. The committee considered this to be acceptable in the circumstances, given that the instrument is largely corrective action in response to minor errors in instrument 161 previously considered by the committee. The DPLR committee noted that the corrective instrument before us today will allow the associated regulations to come into force on the intended date of 28 June 2019. Do members have any comments on the instrument? I therefore invite the committee to agree that it does not wish to make any recommendations in relation to these instruments. Are we agreed? Thank you. That ends the public part of the meeting. I now move this meeting into private.